Rupiah Declines This Week on Current-Account Deficit Concerns
Indonesia’s rupiah fell by the most in a month this week on concern last year’s current-account deficit was more than the official forecast. Government bonds rose, pushing the 10-year yield to the lowest level in 11 months.
PT Mandiri Sekuritas (BMRI), a unit of the nation’s largest lender, said yesterday the shortfall probably exceeded the 2.4 percent of gross domestic product predicted by the central bank on Dec. 11. Barclays Plc estimated yesterday the gap was 2.5 percent, a day after the government reported trade deficits of $478 million and $1.9 billion for November and October, respectively.
“There is pressure on the rupiah to reach the 10,000 per dollar level,” said Taufan Tito, a foreign-exchange dealer at PT Bank Rakyat Indonesia in Jakarta. “The December trade deficit was probably wider than November’s, given the dollar demand from importers then, and the current-account deficit will certainly exceed the central bank’s forecast.”
The rupiah fell 0.5 percent this week to 9,685 per dollar as of 3:29 p.m. in Jakarta, the biggest decline since the five days ended Dec. 7, prices from local banks compiled by Bloomberg show. The currency dropped 0.3 percent today and reached 9,785 on Jan. 2, matching a Dec. 21 level that was the weakest since September 2009.
Its one-month implied volatility, a measure of expected moves in exchange rates used to price options, was steady at 5.7 percent today and this week.
Global funds added 29.5 trillion rupiah ($3 billion) to their local-currency government bond holdings last quarter, the most since the three months through June 2010, finance ministry data show.
The yield on the government’s 5.625 percent notes due May 2023 dropped eight basis points this week to 5.11 percent, the lowest level since Feb. 9, according to prices from the Inter Dealer Market Association. The yield fell two basis points, or 0.02 percentage point, today.
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